Despite ongoing speculation regarding the investment agreement and project finance at the massive Oyu Tolgoi Copper-Gold Project in southern Mongolia, Turquoise Hill Resources has scheduled first commercial production in June.  1

The US$6.2 billion copper-gold complex processed its first ore through the concentrator on January 2 and the first copper-gold concentrate was produced on January 31 this year.

Turquoise Hill is continuing to engage with the Mongolian government and other stakeholders to ensure the implementation of the investment and shareholders’ agreements, after several issues were raised by the government in relation to the project finance and relevant agreements.

The feasibility study for the expansion of operations at Oyu Tolgoi is continuing and is expected to be completed in the first half of 2014 as the company pursues value engineering and optimization.

Meantime, the incoming chief executive officer of joint 66%-shareholder Rio Tinto says he is concerned about the pressure on Mongolia’s state-owned company Erdenes Oyu Tolgoi LLC to increase its share in the complex. Sam Walsh says the idea that the Mongolian government could undermine the original 2009 partnership between the three companies could damage the project’s investment opportunities in the long-term.

The Mongolian government is looking to increase its share which includes a 5% royalty on all sales as the nation faces a revenue squeeze.

“I am concerned by recent political signals in Mongolia calling into question some aspects of the investment agreement. This undermines the partnership we have built and the stability on which a project of this size and scale depends. It puts at risk future investment not only by Rio Tinto but by others considering investing in Mongolia,” Sam Walsh told Reuters.

www.turquoisehill.com

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